New Jersey Passes Act to Increase Out-of-Network Cost Transparency

On June 1, Gov. Murphy signed S485, creating the Out-Of-Network Consumer Protection, Transparency, Cost Containment and Accountability Act. This Act imposes new disclosure obligations for “surprise” out-of-network services and caps the pricing for such health care services. The bill also creates an arbitration system to quickly resolve billing disputes — and imposes significant penalties for noncompliance. Though the act primarily affects health care facilities, health care professionals and health insurance carriers, it also impacts self-insured health benefit plans (those subject to ERISA).

The bill generally requires health care facilities to disclose to patients whether the facility is in-network or out-of-network in respect to the patient’s plan, advise patients that, if in-network, the patient won’t incur any out-of-pocket costs outside of typical costs (e.g. copayment, deductible, etc.) unless the patient knowingly, voluntarily and specifically selects an out-of-network provider to provide services. For “emergency or urgent” services administered out-of-network, the act generally limits the amount a provider can charge to the deductible, copayment or coinsurance amount applicable to in-network services.

The Act incudes an “opt-in” procedure for self-insured health benefit plans (those governed by ERISA). For those plans that want to be subject to the act, they can do so by filing an annual notice with the state and amending their plan document to reflect that the benefits of the statute apply to the plan’s members. If the plan opts in, the participants wouldn’t be balance billed for out-of-network charges for emergency care in excess of the deductible, copayment or coinsurance amount applicable to in-network services, and the plan can take advantage of the act’s binding arbitration agreements. Self-insured health plans that don’t want to opt in don’t need to do anything.

The act goes into effect on or near Aug. 30, 2018 (90 days after enactment). Self-insured plans in New Jersey must determine whether to opt in to be subject to the act by the end of August 2018. Additional regulatory guidance will be forthcoming.

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